The music industry is giddy to join the D.C. stampede to deregulate. ASCAP is leading the pack.
ASCAP has polls: who knew voters had an opinion about who should set royalty rates?
It has Fact Sheets: only free market capitalism can save the music industry.
It has songwriter foot soldiers: Rob Thomas says federal regulations subvert the songwriter’s power to “put food on the table.”
ASCAP has lost its compass.
The core feature of ASCAP’s campaign for “reforms that will level the playing field for songwriters” is to permit publishers to withdraw digital rights from ASCAP and negotiate directly with the streaming services. The services already pay out more than 82% of their revenue to content owners.
Direct licensing won’t increase writer royalties (the only type of money shared with writers); that well is dry. But, it will enrich publishers in many ancillary ways – especially cash guarantees and advances that are not shared with writers.
ASCAP’s fact sheets omit that nuance.
The labels pre-empted “free market rates” and “level playing fields” long ago. It’s too late; they locked in the lion’s share of all revenue.
Song rates for writers are low because payments to labels are high – and secretive. As DMN reported last week, “a large percentage of money gets siphoned off by the major labels Universal Music Group, Warner Music Group, and Sony Music Entertainment.
“Accordingly, those labels have been accused of underpaying (or never paying) their artists, with secretive contracts … confirming the industry’s worst fears.”
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The three major publishers control 70% of the revenue-producing songs in the U.S., and they share corporate parents with those major labels. If those publishers could direct license, they too could gain the same secret benefits enjoyed by their sister labels.
ASCAP’s road to regulatory freedom is paved by publishers. It shouldn’t be. ASCAP and BMI have charters to serve the interests of both songwriters and publishers. And they also have fiduciary obligations that prevent them from screwing writers. They should fight for rate court reforms that streamline the rate-setting process and amend judicial standards to include marketplace benchmarks that can mitigate label overreach.
They should stop supporting the publishers’ agenda that would make them irrelevant.
Jody is a longtime industry executive and investor, and formerly Executive Vice President of Sony/ATV Music Publishing. She’s currently focused on angel tech investing.
Some questions, for anyone who cares to take a shot at answering this… From a publisher’s perspective, what would be the ideal revenue allocation for subscription revenue earned by a streaming service? What percentages should go to the labels, to the publishers, and to the services, if different from how it is now? How much should a subscription cost? Is $10/month too low? If publishers are able to negotiate higher rates, where does the money come from?
the opportunity for listening too the latest, should be allowed, in the payment for using internet, like payin license for tv. That’s how i see it.. im a musician too
Easy: 50/50. Don’t like it? Don’t use the songs. Make NDAs illegal. All contracts must be open to view by all parties whose compensation is directly or indirectly affected by them.
No argument from me regarding NDAs. The more transparency there is with respect to royalty rates, the better.
So how do we get to 50/50? Let’s say that the pool of subscription revenue payable to copyright owners remains the same. It would be a matter of reducing the label share to 50%, and increasing the publisher share to 50%. Now, anyone out there is free to correct me here, though I believe the problem is that the label’s share is not regulated. It’s a rate negotiated between the label and the service. If one were to ask labels to accept less money, the labels would simply say no. You could suggest that the government regulate how much is payable to the artists and labels, in the same manner that publisher and songwriter royalties are regulated. But somehow I don’t think that would go over well with anyone.
So let’s say the pool of subscription revenue payable to copyright owners were to increase. Labels continue to get paid whatever they’re being paid now, and the publishers’ share is increased to be the same as the label share. Sounds awesome, doesn’t it? But how would such a feat be accomplished? Do we raise the subscription rate to something greater than $9.99/month, to cover the cost of royalties to publishers?
I think many here would agree that music is worth more than $9.99/month. I would gladly pay $20/month and still think I’m getting a good deal. Unfortunately, I’m in the minority. The public at large believes $9.99/month is actually too high. Raising the subscription rate may be the right thing to do, but is it practical? We got Youtube and piracy out there. Wouldn’t people cancel their subscriptions in droves and just get their music from Youtube instead? If that happens, no one makes money. 50/50 of nothing isn’t going to do anyone any good.
I think what I’m getting at is… what’s ASCAP’s goal? What’s their end game here? And what practical steps can be taken to achieve it?
Oh… also, I would bet that labels get paid based on some percentage of revenue. Let’s say the percentage is higher than 50% (which is often the case). If the publisher get’s paid the same percentage, that’s over 100% of revenue going to copyright owners. How does the service have enough money to operate their service? Would subscription streaming services all shut down?
Is that the goal? Shut down streaming so everyone buys albums again? Is such a thing practical in this day and age?
Perhaps the goal is for publishers to force labels to choose between accepting a lower rate so that labels and publishers get paid the same, or risk shutting down the streaming business altogether. Is that it?
AGREED
Really poor, misleading article. Big headline with not much substance. Dare i say a troll. ASCAP can be accused of many things. Not helping songwriters is NOT one of the them. DMN is really falling off. The only author i enjoy is Ari Herstand.
If you take a closer look at the author info, it all becomes obvious. The term you’re looking for is “tech industry shill”.